Felda Investment says Encorp buy will speed up property development

FIC chief executive officer (CEO) Mohd Zaid Abdul Jalil said FIC had always had the intention of making a foray into property development, given its collection of land bank across prime areas in Malaysia.

“To expedite the plan, we needed a vehicle, and after some studying, we thought that Encorp was a good platform for us to execute that plan,” he told StarBiz in a phone interview.

Mohd Zaid cited Encorp’s good track record, past performance and capabilities as factors for FIC choosing it as its property development vehicle.

“We want continuity from this, as they have been doing a good job.”

But FIC will probably need to quickly bring in its own team with the imminent departure of key people at Encorp following the takeover.

“Generally, for entities like Felda with large land banks, it may take years to grow organically into a property player to unlock land value,” he noted,

“The only way to move faster is through joint ventures or mergers and acquisitions.”

A property sector analyst agreed that FIC’s move spoke of a long-term plan, regardless of how the property industry is doing now.

“Even though the property market is expected to be a bit soft in the short term, the timing does not really matter because this will benefit FIC, and hence Felda in the bigger picture,” the analyst said when asked if it was a good time to venture into property development instead of other sectors.

Zerin Properties CEO Previndran Singhe said this was a natural progression for Felda as a plantation group to venture into the property sector.

“Take IOI Corp Bhd and Sime Darby Bhd as examples, they started out as plantation companies and over time when their land matured, they entered property development as well. This is a forward-thinking move for Felda,” he said, adding that the corporate move was good for the sector.

By THE STAR

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